The U.S. securities industry is requesting relief from the forthcoming FATCA deadline, citing the operational challenges facing the industry, and warning this could disrupt financial markets.

The Securities Industry and Financial Markets Association (SIFMA) said Monday that it has submitted a letter to officials at the U.S. Department of Treasury and the Internal Revenue Service (IRS) requesting targeted relief from the July 1 implementation deadline for the Foreign Account Tax Compliance Act (FATCA).

“Our members strongly support the goal of detecting and deterring offshore tax evasion by U.S. persons and they are proud to play a part in bringing offshore tax evaders to justice. Increasingly, however, our members are raising concerns with us about the short time frame between the availability of final rules and the ‘go-live’ date for FATCA, less than 10 weeks from today,” said Payson Peabody, managing director and tax counsel, SIFMA.

“It is simply not feasible in less than three full months for all of the impacted domestic and foreign financial institutions to complete detailed implementation plans, prepare written procedures, train personnel, educate clients, and develop and test the systems changes required for compliance with the voluminous changes issued this late in the process,” SIFMA says in its letter, noting that the IRS has estimated that there are as many as 600,000 foreign financial institutions that may be required to register. “Only a small fraction of these institutions has the expertise to adequately comply with FATCA on such short notice,” it says.

It also notes that several significant economies have not signed an International Governmental Agreement (IGA) and thousands of financial institutions still must establish their FATCA status, or register, by May 5, “in order to avoid the risk of a substantial disruption in financial markets.”

“There is still a risk of excessive FATCA withholding that could have adverse consequences for capital markets and, indirectly, for the United States economy,” it warns.

“In a previous comment letter, we urged Treasury to provide at least 16 months from the date FATCA regulations and forms are finalized. Compressing the compliance time frame for executives speaking multiple languages in thousands of financial institutions around the world will increase the costs and risks of FATCA and has the potential to harm the U.S. economy in the long run,” Peabody added.